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Posted

Ever seen the heartwrenching scene unfold when the tax-attorney wants to finance a million dollar home, but no one is willing to lend him the money? It's awful, and thankfully, the Federal Government may soon be poised to do something about it, by raising the limit on loans that GNMA and FNMA can buy to one million dollars, thus fulfilling their mission to promote affordable housing for *all* Americans, not just those with household incomes of ~$140,000 per year or lower. If legislation raising the conforming limit passes, you can not only help him obtain access to credit at below market rates, you can assume fractional ownership of the distressed debt that he leaves behind if he defaults. Beautiful.

 

"WASHINGTON (Reuters) - If Congress decides to temporarily lift the $417,000 cap on mortgage loans eligible for purchase by Fannie Mae and Freddie Mac, then a reasonable level might be $1 million, Federal Reserve Chairman Ben Bernanke said on Thursday.

 

Charles Schumer, the New York Democrat who chairs the congressional Joint Economic Committee, asked Bernanke what his thoughts would be on a new upper limit for those loans, and Bernanke replied, "A million."

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Posted

Plenty to go around. You'll also have the opportunity to pay for rebuilding many thousands of homes in coastal Florida with values well in excess of a million dollars since they couldn't afford *both* the Beemer and pay the premiums necessary to adequately underwrite the risk. Thankfully, the state stepped in agreed to provide coverage at rates well below those necessary to cover the risk - and has set aside reserves that vastly inadequate - so instead of private insurers footing the bill, Florida will go bankrupt and you'll get the chance to chip in.

 

In normal circumstances, you factor the cost of insurance into the cost of owning a home, and as one goes up, the other goes down. Instead of the owners of a private asset having the price of the risk associated with that asset incorporated into the value, it's transferred to others via this mechanism. Ditto for this attempt to prop up the value of expensive homes by the public assuming the risk associated with financing them.

 

It's just a shame that the Federal Government didn't take more aggressive action to do the same for stock investors, and agree to underwrite the difference between any given stocks actual value and the value it had at the peak of the market.

Posted

I agree. But I would go a bit further to say that forcing states and local communities to do some land planning, and providing some oversight to the securities market could have avoided a lot of these issue.

 

Bailing out homeowners in diaster prone areas, or stock holders in risky ventures equates to a government bail out, rewards bad decisions, and raises costs for more astute investors.

Posted
I agree. But I would go a bit further to say that forcing states and local communities to do some land planning, and providing some oversight to the securities market could have avoided a lot of these issue.

 

Bailing out homeowners in diaster prone areas, or stock holders in risky ventures equates to a government bail out, rewards bad decisions, and raises costs for more astute investors.

 

'Planning'? What is this word, 'planning'?

Posted
Plenty to go around. You'll also have the opportunity to pay for rebuilding many thousands of homes in coastal Florida with values well in excess of a million dollars since they couldn't afford *both* the Beemer and pay the premiums necessary to adequately underwrite the risk. Thankfully, the state stepped in agreed to provide coverage at rates well below those necessary to cover the risk - and has set aside reserves that vastly inadequate - so instead of private insurers footing the bill, Florida will go bankrupt and you'll get the chance to chip in.

 

Temporary problem.

 

Buh bye, Florida....

 

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Posted

One word. Levees. I'm confident that with enough public funding they'll be able to design and build a system at least as sound as the system that's protected New Orleans for decades. With Florida's well earned reputation for efficiency, honesty, and competence behind such a project, what could go wrong.

Posted
One word. Levees. I'm confident that with enough public funding they'll be able to design and build a system at least as sound as the system that's protected New Orleans for decades. With Florida's well earned reputation for efficiency, honesty, and competence behind such a project, what could go wrong.

 

And windmills. Don't forget the windmills.

Posted

Jeesh. Why bother with actually trying to reduce the source of the effect. Why that could effect the economy of the US. (inundation is a minor problem)

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